The statutory rules regarding Assets of Community Value form part of the Localism Act which came into force on 1st November 2011. It did so to further the Government’s aims of allowing local communities more control in the disposal of properties within their area.
The Act is geared towards restricting certain types of local commercial properties from being sold to a third party outside of the local community and stripping that community of its identity.
What are Assets of Community Value?
An Asset of Community Value is commercial land or building that has been listed with its local authority as property that is considered, in the opinion of that authority, to further (and continue to further) the social wellbeing or social interests of the local community.
The definition of social interests can be widely interpreted and includes cultural, recreational and sporting activities.
Generally, the types of property the Government intended to protect are properties like local pubs, libraries, community halls or shops (and so on), but the Act does not specify what will be included (it has, however, been stated that residential homes, caravan sites and property used by statutory undertakings will not be able to be listed as an Asset of Community Value).
How an Asset of Community Value works
Any local community interest group (parish councils, forums or charities, for example) can apply to the local authority for any commercial property to be included in that authority’s list of Assets of Community Value. The local authority will then decide on the merits of the application, and, should they consider the property does further the social wellbeing or interests of the local community, they will add it to their list.
The local authority must then write to the owner (and/or occupier) of the property to notify them of the property’s listing. In addition to this, the local authority must enter a restriction at the Land Registry against the property’s title register.
The property will then be listed as an Asset of Community Value with the local authority for a period of 5 years. Once that period has expired, the property will no longer be listed as an Asset of Community Value and the local authority is obliged to remove its restriction from the property’s title as soon as practicable.
What it means to own an Asset of Community Value
An owner of property that has been listed as an Asset of Community Value will not see an impact until they come to dispose of that property (i.e. by sale or lease), where they will be met by certain restrictions.
Before disposing of a property that is listed as an Asset of Community Value, the owner will need to notify their local authority in writing of their intention to do so. The local authority will then amend their list accordingly (to state the date of the owner’s intention to dispose). The local authority will also need to notify the local community of the owner’s intention to dispose of the Asset of Community Value.
Following this notice to the local authority, the owner will need to wait a period of 6 weeks (known as the “Interim Moratorium”) and, if no local community group states their interests in purchasing the property in that period, the owner can then progress to disposing of the Asset of Community Value.
If, however, interests to purchase the Asset of Community Value by a local community group are expressed within the Interim Moratorium, the owner must either wait a further 6 months from the date that group expresses its interest (known as the “Full Moratorium”) to sell on the open market, or sell the property to the interested local community at a price agreed between them.
The owner does not have to sell the property to a local community group so long as it has allowed them the opportunity to express their interest and enter a bid for the property. The owner will be able to dispose of the Asset of Community Value on the open market once the Full Moratorium has expired, and will be able to do so for a period of 18 months (beginning from the date the owner first notified the local authority of their intention to dispose of the property). This period is referred to as the “Protected Period”.
Once the Protected Period has expired, the owner must begin the process again if they wish to try and dispose of the property again (i.e. start by notifying the local authority).
The Act allows for certain types of disposal that will be exempt from the requirement of complying with the process stated above, and you can read about these in the Act itself.
Any disposal of an Asset of Community Value that fails to comply with these provisions will be deemed ineffective.
Impact of an Asset of Community Value
Accordingly, the impact of an owner’s property being listed as an Asset of Community Value is dependent on what that owner intends to do with the property.
If the owner intends to keep the property for the next 5 years, they will not need to do anything and will most likely not notice any effects of the Asset of Community Value listing at all.
If, however, the owner does intend to dispose of the property within those 5 years, they will have to comply with the procedure outlined above. This can have an obvious impact on an owner who needs to sell or otherwise dispose of their property in a short amount of time and may not be able to wait for the full 6 weeks (or, potentially, 6 months), but will be restricted by the Act nonetheless.
BHW Solicitor’s Commercial Property department has experience of dealing with disposals of commercial property that are classed as an Asset of Community Value. If you have any enquiries, please contact James Bryce on 0116 289 7000 or email email@example.com.
Categorised in: Commercial Property, NewsTags: Commercial Property, Landlord, Leases, Residential Property